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1 – 5 of 5Eleftheria Papastefanaki, Christos Papathanasiou and Nikos Vafeas
Apostolos Christopoulos, Ioannis Dokas, Christos Leontidis and Eleftherios Spyromitros
This paper attempts to investigate the effect of corruption on the real and accrual earnings management of target firms in the process of mergers and acquisitions.
Abstract
Purpose
This paper attempts to investigate the effect of corruption on the real and accrual earnings management of target firms in the process of mergers and acquisitions.
Design/methodology/approach
The sample includes target firms from the European area that participate in mergers or acquisitions announced during 2010–2020. The preliminary empirical part estimates the level of earnings management during the period two years before the deal's announcement to identify whether the sample follows the manipulation behavior that the literature suggests for target firms. The primary empirical analysis focuses on the impact of corruption on real and accrual-based earnings management proxies, employing regression models and two alternative proxies for corruption. The existing literature points out that the combination of low levels of corruption and an integrated legal system reduces earnings manipulation.
Findings
The findings provide strong evidence for systematic downwards accounting manipulation practices, whereas the findings for real earnings management are not significant. The findings of the main empirical part show that corruption is positively associated with accrual-based manipulation and negatively related to real earnings management. In essence, in economies with a high level of transparency, managers adopt the manipulation of operating activities as a less detectable practice of earnings management instead of engaging in accounting procedures.
Originality/value
This study contributes to the literature highlighting the diversification of these firms' manipulation strategies according to the national level's corruption status.
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Keywords
Constantin Zopounidis, Alexandros Garefalakis, Christos Lemonakis and Ioannis Passas
The purpose of this paper is to provide to the Board of Directors and CEOs of a firm to be aware of and accountable for the information they provide to the public. As long as the…
Abstract
Purpose
The purpose of this paper is to provide to the Board of Directors and CEOs of a firm to be aware of and accountable for the information they provide to the public. As long as the quality of the companies’ public information is high, it will be able to retain its investors as well as to obtain new ones more easily.
Design/methodology/approach
This paper introduces a Multi-Criteria Decision Aid (MCDA) tool with the use of the PROMETHEE II method to formulate an alternative aggregate ESG quality approach. We conduct comparisons in a sectorial and regional based perspective during different exam periods before and after the implementation of International Financial Reporting Standards (IFRS), in an attempt to provide a robust framework for corporate disclosure reporting.
Findings
The findings are of particular interest to both scholars and decision-makers, including providers of corporate governance indices and rating agencies. The innovation of this paper lies among others in using the MCDA method with the ESG framework, which proposes a combination of qualitative and quantitative criteria, enabling experienced and/or not experienced analysts to avoid manipulating techniques in business information.
Research limitations/implications
The sample of companies based on the US and Europe companies incorporating only large-sized ones.
Practical implications
Findings are of particular interest to both scholars and decision-makers including providers of corporate governance indices and rating agencies.
Social implications
Better understanding features pay key importance for increasing the “quality” information in firms financial statements, especially after the use of IFRS in reporting standards.
Originality/value
The authors proceed to analysis using a multiple perspective use that is decomposed into the following options: (a) Time-period oriented option, (b) Regional-oriented option and (c) Sectoral-oriented option respectively.
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